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Both of Carr’s Group’s divisions have continued to operate throughout the coronavirus lockdowns as they serve key markets. While adjusted PBT was 17% lower year-on-year during FY20 because of an unseasonably mild winter in the UK and delays in engineering contracts, a pick-up in US cattle prices at the year-end helped deliver a full-year result ahead of our estimates, which were revised down in March.
Companies: Carr's Group PLC
Cake Box’s interim results reconfirmed the company’s resilience in the face of extremely adverse circumstances for UK High Street retailers. Cake Box reported only single digit declines in sales revenue and profits in the period as the business benefited from its flexibility, financial strength, and an ongoing customer commitment to celebration. In our view, celebration’s resilience as a category, product innovation, increased outlets, and a commitment to “steady, sensible and sustainable” growth, augur well for further revenue expansion. Yet the group’s valuation remains attractive.
Companies: Cake Box Holdings Plc
Today's news & views, plus announcements from KGF, MRO, UU, BAB, BRW, FUTR, GNS, HICL, LIO, AEXG, FUL, KWS
Companies: AEX GNS HICL
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
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Nichols has issued a 9m trading update to the end of Sept and a full year outlook. Following on from H1, it is pleasing to see further positive momentum across the dominant activities of UK Vimto Packaged and International (c70% FY19 sales), whilst the cash position remains very healthy. Unsurprisingly OoH has remained significantly challenged (Q3 sales -45%), but we welcome the positive actions signalled this morning to align costs to a period of softer revenue whilst its main end market of hospitality navigates a pre/post Covid-19 landscape. Full year PBT guidance is for £11-13m - down c60% y/y, reflecting high operational gearing at OoH from a >£25m loss of sales. With FY21 a year of partial profit recovery, FY22 is of greater relevance from a valuation perspective and whilst guidance remains suspended, we see a pathway to get to 80-85% of our previous FY20 PBT of £29m. This would imply EPS of c53p, set against a 10 year P/E average of 20.4x. Overall, we feel OoH uncertainty is priced in and should not overshadow the ongoing resilience of core activities, as well as the fundamentals around longevity/growth prospects of the Vimto brand, geographical diversity and a strong c£44m of net-cash to capitalise on future opportunities.
Companies: Nichols plc
Cranswick’s H121 results underscore the company’s strength and broad-based positive momentum. Revenues were up an impressive 17% on a like-for-like basis, adjusted operating profit was up 31% to £62m with margins up +50bp, and adjusted EPS was up 30% to 93p, with reported EPS up 12%. The interim dividend was up 12% to 18.7p, and net debt (excluding IFRS 16 lease liabilities) was £54.6m. Cranswick has made a strong start to the year. Management is understandably cautious given uncertainty surrounding both the pandemic and Brexit, but the outlook for the current year remains unchanged.
Companies: Cranswick plc
Animal Health is a vast market with multiple long-term growth characteristics and opportunities. In this report we have outlined valuations, M&A activity and the key growth drivers in two animal health subsectors: companion animal health and livestock health. Although the commercial positioning of the eight companies covered in this report (Animalcare, Anpario, Benchmark Holdings, CVS Group, Dechra, ECO Animal Health, Genus and Pets at Home) differ significantly, all have exposure to positive market trends.
Companies: GNS ANCR CVSG DPH BMK EAH ANP PETS
Diversified Gas & Oil is paying $575m for further oil and gas assets in the Appalachia basin. This will enhance earnings as well as enable a significant increase in dividend. The deal is partly financed by a placing raising £189.5m at 97p a share. This is the third time in little more than 12 months that Diversified has raised cash at a share price above the flotation price.
Companies: FPO DRV APP WYN AAU CRPR
Premier Foods’ H119 results demonstrate the business has become more resilient under the stewardship of outgoing CEO, Gavin Darby. Revenue growth of 1.0% in Q2 despite the hot summer was encouraging, and the UK relaunch of the Mr Kipling brand has clearly gone well. The news that Ambrosia may be sold suggests yet another step in the business transformation, although the price will determine the level of dilution and any change to net debt/EBITDA.
Companies: Premier Foods plc
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
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The trade-off in the risk/reward for gold and gold mining equities is improving, as central banks push the current iteration of the post-World War II Bretton Woods financial order towards its limits.
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As flagged in an interim management statement in January, Carr’s Group’s UK agricultural activities have been adversely affected by the mild winter that has depressed demand for feed and feed supplements. Based on the order pipeline, management had expected this would be balanced by overperformance in the Engineering division, but delays in receiving orders will lead to underperformance here as well. We cut our FY20 and FY21 EPS estimates by 26% and 10% respectively and reduce our indicative valuation from 190p/share to 172p/share.
Premier Foods’ FY20 results demonstrate the substantial progress the company has made over the past few years. The UK business has now grown for 11 consecutive quarters and Q121 is set to be very strong. In the UK the brands grew ahead of their categories and the innovation rate has hit a new high. A new landmark pensions agreement was signed in April, which could potentially significantly reduce the future funding requirements for Premier Foods. The recent triennial actuarial valuation delivers further credence to the pensions deal.